In another incremental piece of ostensibly encouraging trade news, Beijing has granted fresh waivers to a handful of state and private buyers for US soybeans.
According to the ubiquitous people familiar with the matter, the exemptions cover purchases of between 2 and 3 million tons. Some 20 cargoes (around 1.2 million tons) have already been purchased from the US Pacific Northwest, sources told Bloomberg.
This comes on the heels of working-level discussions last week aimed at paving the way for Vice Premier Liu He, who will meet Bob Lighthizer and Steve Mnuchin on the week of October 7 for principal-level discussions. On Monday, the market learned that the Chinese delegation actually didn’t cancel planned visits to US farms of their own accord, but rather at the request of Mnuchin and Lighthizer. That cancelation roiled markets on Friday, so the fact that it wasn’t China’s idea to call it off is good news, even as it left Trump just as confused as traders.
Trump is, of course, keen to show the agricultural community that his promises around China purchasing “large quantities” of farm goods aren’t as empty as they sound.
Farmers have been forced to take billions in government handouts to offset the deleterious effects of the trade war, which has stripped them of access to their most important export market. That aid has not necessarily been distributed in an equitable manner, some argue.
After rising for two straight months, the Purdue University/CME Group Ag Economy Barometer (derived from a survey of 400 agricultural producers) fell sharply in August, dropping 29 points amid declines in both the Index of Current Conditions, which dropped 19 points below the previous month, and the Index of Future Expectations, which fell 34 points.
The gauge slid to a Trump-era nadir in May after the president broke the Buenos Aires truce and reignited tensions with Beijing.
Trump has referred to America’s agricultural community as “great patriot farmers”, and variously suggested they are willing to risk their livelihoods for his trade war.
According to a review of FDIC quarterly call report data conducted by the Farm Bureau, delinquency rates for commercial agricultural loans in both the real estate and non-real estate lending sectors are at a six-year high.
“While the delinquency rates are well below the levels experienced following the recession, they are above the historical average and trending in the wrong direction due to several years of poor farm income exasperated by extreme weather events and ongoing trade disruptions”, the Bureau said earlier this summer.